I found this really great report that should be on every entrepreneur's list to review both for their industry and also for their customers. Growth is great, especially those businesses that are recovering from the pandemic, BUT as we should know better now, not all businesses face the same risk. If a specific industry is at more risk, are you blindly going to walk back into it and hope, or is there more you can do to protect your business?
These are the Top 200 industries primed for growth (with risks) using the projected Compound Annual Growth Rate (CAGR) from 2021-2026.
In addition to the CAGR numbers, this data can be sorted and filtered by total industry revenue, number of businesses, growth trajectory and risk score to explore possible industries that could be in need of additional accounting and advisory services due to continued growth yet elevated risk.
To download the information please follow this link where you can submit your information and get the report.
In very simple terms, a like-kind exchange is a tax-deferred transaction that allows one asset to be swapped with another, similar asset without generating a capital gains tax liability from the sale of the first asset.
Prior to the Tax Cuts and Jobs Act of 2017 (TCJA), the IRS permitted the exchange of certain personal property, intellectual property and intangible property as long as that property was then exchanged for other personal property. The TCJA narrowed the scope of Internal Revenue Code Section 1031 like-kind exchanges to the exchange of real property that is of the same nature and character, even if it differs in grade or quality. It defined real property as "land and improvements to land, unsevered natural products of land, and water and air space superjacent to land."
Primary residences, inventory, corporation common stock and indebtedness or notes are specifically excluded from Section 1031 like-kind exchanges. In addition, exchanges of machinery, equipment, intellectual property, intangible business assets, etc., generally do not qualify as real property exchanges. Exceptions to this rule include certain exchanges of stock in mutual ditch, reservoir or irrigation companies.
The result is that any personal property transferred in a Section 1031 like-kind exchange is treated as if it were bought and sold in separate transactions, and any capital gains on the sale cannot be deferred. Practically speaking, this means every distinct asset included in the exchange must be analyzed separately from every other asset to determine whether it meets this definition.
As might be expected, the rules are complex. A qualifying exchange must adhere to the following rules:
Section 1031 like-kind exchanges can be an excellent way to discharge appreciated property that would generate a high capital gains tax if it were sold. It may also be the best choice in other circumstances, such as if the property would otherwise have been sold at a loss.
This is just of summary of a series of complex provisions. If you think a Section 1031 like-kind exchange is right for you, be sure to get professional advice from the start.
like kind exchange
The Child and Dependent Care Tax Credit is available to parents and caregivers who are either working or looking for work and who claim dependents on their tax return. The credit is available to those who care for children under age 13 or a spouse or dependent of any age who is physically or mentally incapable of caring for himself or herself.
The CTC was created in 1997 and has been expanded several times since, most recently in 2020. The COVID-19 pandemic profoundly affected how, where and when people work. The incredible disruption this caused affected people's incomes and livelihoods, and the federal government responded by approving pandemic relief legislation that included changes to the child care tax credit.
The latest of these changes were mandated by the American Rescue Plan Act (ARPA), which increased the maximum amount of eligible expenses as well as the maximum percentage of eligible expenses for which the credit may be taken. ARPA also modified how the credit is phased out for higher earners.
Perhaps the most important changes for eligible taxpayers planning to claim this credit for 2021 is that
Who Can Claim the Credit?
To be eligible to claim the enhanced child care credit, taxpayers must meet all these requirements:
How the advance child tax credit work
Eligible taxpayers will receive 50% of their credit in equal monthly installments starting in July 2021. The remaining 50% will be applied on their 2021 taxes after they file next year.
The advance credit is phased out or eliminated completely for taxpayers whose AGI is above $150,000 for married taxpayers filing jointly and qualifying widows or widowers, $112,500 for those who file as head of household, and $75,000 for single filers or married taxpayers filing separately.
The IRS will make the advance payments automatically for July, August, September, October, November and December. Eligible taxpayers do not have to enroll.
Taxpayers who do not wish to receive advance payments because they are close to the income-eligibility limits, pay estimated taxes or expect to owe taxes with their 2021 tax return can opt out by using the Child Tax Credit Update Portal on the IRS website and clicking on "Unenroll from Advance Payments." However, as of now, taxpayers cannot choose to opt out and then change their minds and opt in.
The specific rules relating to this credit, such as the definition of a work-related expense, are complex. Make sure to consult with a tax adviser to discuss your specific situation.
IRS extends additional tax deadlines for individuals to May 17
With Tax Day officially moved to May 17, 2021, there were several associated deadlines that normally go hand in hand with the individual tax deadline but were not specially addressed.
On March 29 the IRS addressed the most pressing of these with Notice 2021-21, which specified that the following tax related deadlines were also moved to May 17, 2021, to correspond with the individual income tax deadline.
The most item not covered with Notice 2021-21 is First Quarter 2021 Estimated Tax Payments which are currently still due April 15. Were monitoring this situation and will provide and update should this date also change to May 17.*
For more information, a link to the IRS announcement is here [LINK] along with a downloadable copy of Notice 2021-21 below.
* correction from early posting which incorrectly listed stated Q1 2021 Estimated Tax Payments were due May 17.
The six-month free COBRA period is from April through September 2021
Forbearance and Eviction Moratoriums
According to December survey data collected by the Bureau of Labor Statistics,
Roughly 26.8 million Americans are either unemployed, experiencing reduced pay and work hours or have left the labor market entirely.
https://ramlcpa.link/3d56d | Journal of Accountancy
While not law just yet, it is expected to be signed by the president as soon as today.
While we know many key details, there are some key details we don't know, especially regarding the PPP Loan Program. The most pressing in my mind are bank participation and when applications will be accepted as some time will be needed to restart the program.
Additional details will be forthcoming and the below summary will probably be updated over the coming days for additional details and clarifications.
Below, I summarize the key provisions in the bill:
PPP Round 2 & EIDL
$325 billion in aid for small businesses struggling after nine months of pandemic-induced economic hardships.
$166 billion for economic impact payments of
$120 billion to provide workers receiving unemployment benefits a
$25 billion in emergency rental aid and an extension of the national eviction moratorium through Jan. 31, 2021.
$45 billion in transportation funding, including
$82 billion in funding for colleges and schools, including support for HVAC repair and replacement to mitigate virus transmission, and
$10 billion in child care assistance.
$22 billion for health-related expenses incurred by state, local, Tribal, and territorial governments.
$13 billion for emergency food assistance, including a 15% increase for six months in Supplemental Nutrition Assistance Program benefits.
$7 billion for broadband expansion.
The bill also extends the
and temporarily allows a
Business Meals 100% Deductible
PPP Round two (2) Who is eligible to apply
PPP Round one (1) recipients (PPP1) may apply for another loan of up to $2 million, provided they:
PPP loan terms
As with PPP Round 1 (PPP1), the costs eligible for loan forgiveness in PPP Round 2 (PPP2) include payroll, rent, covered mortgage interest, and utilities.
PPP2 also makes (adds) the following potentially forgivable:
To be eligible for full loan forgiveness, PPP borrowers will have to spend no less than 60% of the funds on payroll over a covered period of either eight (8) or twenty-four (24) weeks — the same parameters PPP1 had when it stopped accepting applications in August.
PPP borrowers may receive a loan amount of up to 2.5 times their average monthly payroll costs in the year prior to the loan or the calendar year, the same as with PPP1, but the maximum loan amount has been cut from $10 million in the first round to the previously mentioned $2 million maximum. PPP borrowers with NAICS codes starting with 72 (hotels and restaurants) can get up to 3.5 times their average monthly payroll costs, again subject to a $2 million maximum.
Simplified application and other terms of note
The new COVID-19 relief bill also:
Tax deductibility for PPP expenses
The bill also specifies that business expenses paid with forgiven PPP loans are tax-deductible. This supersedes IRS guidance that such expenses could not be deducted and brings the policy in line with what the AICPA and hundreds of other business associations have argued was Congress’s intent when it created the original PPP as part of the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act, P.L. 116-136 (see the Dec. 3 letter from the AICPA and state societies to congressional leaders).
The COVID-19 relief bill clarifies that “no deduction shall be denied, no tax attribute shall be reduced, and no basis e shall be denied, by reason of the exclusion from gross income provided” by Section 1106 of the CARES Act (which has been redesignated as Section 7A of the Small Business Act). This provision applies to loans under both the original PPP and subsequent PPP loans.
It's a fallacy to think that you achieve absolute security and complete peace of mind, especially with your finances. You can prepare and save huge sums of money only to find out it was enough to cover situation X, but situation Y, the one you hadn't considered, not even close. If the pandemic taught us anything, it's that no industry, business, or our economy is immune from significant disruption given the right circumstances.
That said, there are steps we can take to better address the inherent risk we face in and our lives and especially with our finances, The below list comes from an article by Michael Kay and while I've used these points when providing professional advice, the way they're stated here is unlike how they're normally presented by an accountant or financial planner. I especially appreciate items #2, #4.and #6 as they don't require a degree in accounting or finance to see their importance.
Travis Raml, CPA